New Asian infrastructure bank approves first funding projects

24 Jun 16

Directors of the new Asian Infrastructure Investment Bank have today approved financing for the organisation’s first four projects, worth half a billion US dollars in total.

The AIIB will contribute $509m toward a power network expansion and upgrade in Bangladesh, a slum upgrade project in India, a motorway in Pakistan and road improvements in Tajikistan.

AIIB president, Jin Liqun, said he was “delighted” to be announcing the bank’s first group of loans just six months after it opened for business earlier this year.

China established the bank and is today its largest contributor, with its initial subscription totalling $29.78bn of the $100bn in authorised capital.

Liqun commented: “These projects, which span the energy, urban development and transport sectors, will help to bridge the region’s critical infrastructure financing gap and strengthen regional connectivity”.

Aside from the project in Bangladesh, worth $165m from the AIIB, the other three initiatives approved today will be co-financed by other international lenders and aid agencies. These include the World Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the UK’s Department for International Development.

This trio of projects represents the first co-financing deals the AIIB has secured as it looks to cement its reputation as a co-operator rather than a competitor. Since its inception, the bank has struggled to convince observers that it does not intend to rival the established Western-dominated development banks.

Today, however, it has established strong relationships with its peers and garnered $100bn in capital from members across the world, with nations spanning Asia, Europe, Latin America, the Pacific, Africa and the Middle East signing up to be shareholders.

President of the European Bank for Reconstruction and Development, Suma Chakarabarti, has praised the bank’s creation; meanwhile, earlier this year, the AIIB struck a deal with the World Bank to co-finance $1.2bn worth of projects together in 2016.

In a separate development, the Asian Development Bank announced today it has approved half a billion dollars worth of financing to construct India’s longest bridge.

The 9.8 kilometre bridge will traverse the Ganges River, providing transport links between the northern and southern parts of the state of Bihar and with neighbouring Nepal. The bridge is expected to be completed by December 2020.

The bank also approved a $257m loan to Bangladesh for water efficiency improvements in the country’s fast-growing capital Dhaka.

Akira Matusnaga, economist at the ADB’s South Asia department, said the project will help Dhaka improve its water management and prevent losses, which currently hinder the ability of the city to meet rapidly growing customer needs. 

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